The accountant for Sam Inc. is preparing the budgets for operating department support service costs. Maintenance costs are allocated based on square feet, and cafeteria costs are allocated based on number of employees. The following data have been collected: Support Departments Operating Departments Maintenance Cafeteria Cutting Packaging Direct costs $ 50,000 $45,000 $275,000 $300,000 Number of employees 15 10 150 250 Square feet 1,500 2,000 3,500 4,000 If the step-down method is used and maintenance is allocated first, the total cost allocated to the cutting department will be $55,757 $ 39,243 $20,822 $40,208. I need help with explanation. Thanks!
The accountant for Sam Inc. is preparing the budgets for operating department support service costs. Maintenance costs are allocated based on square feet, and cafeteria costs are allocated based on number of employees. The following data have been collected: Support Departments Operating Departments Maintenance Cafeteria Cutting Packaging Direct costs $ 50,000 $45,000 $275,000 $300,000 Number of employees 15 10 150 250 Square feet 1,500 2,000 3,500 4,000 If the step-down method is used and maintenance is allocated first, the total cost allocated to the cutting department will be $55,757 $ 39,243 $20,822 $40,208. I need help with explanation. Thanks!
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The accountant for Sam Inc. is preparing the budgets
for operating department support service costs.
Maintenance costs are allocated based on square feet,
and cafeteria costs are allocated based on number of
employees. The following data have been collected:
Support Departments Operating Departments
Maintenance Cafeteria Cutting Packaging Direct costs $
50,000 $45,000 $275,000 $300,000 Number of
employees 15 10 150 250 Square feet
1,500 2,000 3,500 4,000 If the step-down method is
used and maintenance is allocated first, the total cost
allocated to the cutting department will be $55,757 $
39,243 $20,822 $40,208. I need help with
explanation. Thanks!
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